taxes

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U.S.: What Happened When States Legalized Marijuana

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By Steve Elliott
Hemp News

When the sale of marijuana for recreational use became legal in Colorado and Washington last year -- and in Oregon this year -- a few predictions, both good and bad, were made about the outcome. Here's what has actually happened so far.

Positives

• No increase in teen use: Opponents of legalization claimed young people would flock to weed if the legal penalties were removed. That hasn't happened, reports Daniel Dale at The Star. Major studies have found no increase in teen use in states the legalized medical marijuana; in Colorado, fewer students said they used pot after legalization than before.

• Tax windfall: Colorado has taken in more than $86 million in cannabis taxes and fees this year, far more than for alcohol. Washington state is predicting $1 billion in marijuana taxes over the next four years. "All that money that was going to criminals and the hands of cartels is now being sent toward legitimate taxpaying businesses," said Morgan Fox of the Marijuana Policy Project.

U.S.: National Cannabis Industry Association Expands Advocacy Team On Capitol Hill

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“We’re taking our legislative strategy to a new level, enlisting a top-quality bipartisan team to further fight for the rights of our responsible small business owners.”

With the legal marijuana business valued at nearly $3 billion nationwide and growing, a national trade group -- the National Cannabis Industry Association (NCIA) -- is expanding its advocacy team on Capitol Hill.

NCIA has partnered with D.C.-based public affairs firms Heather Podesta + Partners and Jochum Shore & Trossevin PC to magnify its efforts to address the industry’s top federal priorities: access to basic banking services and fair federal taxation.

“In the five years since NCIA was formed, we’ve gone from simply seeking to have our industry’s issues taken seriously to bipartisan legislation introduced in both chambers,” said NCIA executive director Aaron Smith. “We’ve seen successful appropriations amendment votes on the House floor and in Senate committee, and we’ve helped bring together a coalition of lawmakers that spans the political spectrum.

“Now we’re taking our legislative strategy to a new level, enlisting a top-quality bipartisan team to further fight for the rights of our responsible small business owners to be treated fairly under federal law,” Smith said.

U.S.: Federal Appeals Court Says Marijuana Businesses Cannot Deduct Expenses

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By Steve Elliott
Hemp News

In a huge blow to the newly legal marijuana industry, the IRS has convinced the Ninth Circuit Court of Appeals that marijuana dispensaries can't deduct business expenses, and must pay taxes on 100 percent of their gross income, reports Robert W. Wood at Forbes.

Almost every business in the United States pays taxes only on net profits, after expenses. But marijuana businesses are different -- they must pay taxes on gross profits, according to a Ninth Circuit federal court decision on Thursday, reports Paul L. Caron at the TaxProf Blog.

The court affirmed than the Internal Revenue Service's Section 280E prevents a San Francisco medical marijuana dispensary from deducting ordinary or necessary business expenses because its Vapor Room is a "trade or business ... consist[ing] of trafficking in controlled substances ... prohibited by Federal law." [Olive v. Commissioner, No. 13-70510 (July 9, 2015)

Colorado: Lawmakers Don't Want To Refund Marijuana Taxes To The Public

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By Steve Elliott
Hemp News

One year after Colorado became the first state to allow recreational marijuana, millions of tax dollars are rolling in, just as predicted. The funds were supposed to be dedicated to school construction, along with regulating cannabis sales, but a legal complication may force the state to refund that money to the public -- and lawmakers don't want that to happen.

A strict anti-spending provision in the Colorado Constitution -- a voter-approved measure called the Taxpayer's Bill of Rights -- may require the state to refund nearly $60 million in marijuana taxes, reports Jack Healy at The New York Times.

Legislators are trying to figure out a way to keep the money, and they're hoping Colorado voters will let them. Republicans and Democrats in the Colorado Legislature don't agree very often when it comes to taxes, but it seems both parties agree they want to keep the cash, and legislators are working on a bill which would ask voters' permission to not give the money back.

"Despite our anti-tax feelings in the state, there's an exception being made when it comes to marijuana," said Michael Elliott, executive director of the Marijuana Industry Group, a Denver-based trade organization that isn't taking a stand on the refund issue. "The industry is making a huge economic impact."

Colorado: The Fight Is On Over Marijuana Taxes

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By Steve Elliott
Hemp News

Not everyone in Colorado is happy with the proposed sales and excise taxes on recreational marijuana, which, if approved, will kick in on January 1 when sales begin.

A few dozen activists have joined to oppose the state tax rates, saying the taxes are simply too high and will motivate consumers to purchase pot from the black market instead, reports Kristen Wyatt of The Associated Press. They've organized three joint giveaways, which don't violate Colorado law as long as the joints are free and the recipients are 21 or older.

At a joint giveaway in Denver last week, activists jeered dispensary owners who support the tax, and also criticized Colorado Gov. John Hickenlooper, who attended a $1,000-per-plate fundraiser to support the tax.

"If we overtax it, just watch," said Larisa Bolivar, a former dispensary owner who is now executive director of the campaign against the tax.

The taxes, if approved, would be higher than the taxes on alcohol, but lower than the taxes on tobacco. Tobacco has a 34 percent excise tax; state excise taxes for alcohol are 8 cents per gallon for beer, 7.33 cents per liter for wine, and 60 cents per liter for liquor.

The November 5 ballot measure includes a 15 percent excise tax and an initial 10 percent sales tax.

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